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Ch. 15, Discussion 2 Discharge of Contracts Foreseeability

Ch. 15, Discussion 2 Discharge of Contracts Foreseeability

Q Dealer contracts with Farmer to deliver 1000 bushels of barley at $3/bu. Contracts is generic and does not specify grade, or even quality. (contract calls for 'generic' grade, as in any old barley will do.) Due to the summer drought, Farmer's crop was destroyed. (Was it 'foreseeable', as in likely to happen? Did the contract 'assume' this risk?) The price of barley has risen substantially to $5/bu. because of the drought. Dealer sues for damages, Farmer defends on the doctrine of impossibility of performance. Is he correct? When you write a contract some 'conditions' are assumed. If something, an 'intervening event' happens that was not 'foreseeable', then the contract fails, and parties just walk away. So, take a look at these doctrines, including frustration of purpose and impossibility, and give an opinion on our dynamic. Cf. page 236-237 on Impossibility of Performance, et al.

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I think that this is a clear case of a Termination by Impossibility of Performance. This is because first of all a drought is an unforeseen circumstance which the farmer had faced suddenly and did not know what to do. The farmer was at no fault at all in this case. According to the principle of the law of Impossibility of Performance, a contract gets automatically and effectively terminated when there is the actualization of Impossibility of Performance due to a particular unforeseen circumstance or situation. Therefore, the destroying of the Farmer’s crop by the unforeseen drought voids the contract as the Farmer would have to again grow crops and renew the contract for giving the Farmer a little more time. However, the Farmer could also use old crops if the Farmer had any acquired crops which would be sufficient for being measured up to 1000 bushels of barley. If the Farmer does have old barley and can provide the Dealer with the desired quantity then I think that the contract can be enforced. Otherwise, the contract would definitely not be likely to get enforced. The drought was assumed as assumption of an unforeseen condition. Therefore, the drought was foreseeable as in likely to happen. If the Farmer does not have old barley of the desired quantity, then the Farmer as well as the Dealer would be discharged from all obligations because of Termination by Impossibility of Performance in case of this contract.